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BP p.l.c. (GB:BP)
LSE:BP
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BP p.l.c.
(LSE:BP)
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Rating:60Neutral
Price Target:
484.00p
▼(-0.79% Downside)
Action:DowngradedDate:02/18/26
The score is driven mainly by adequate but mixed financial performance (strong cash generation offset by weaker profitability and rising leverage) and constructive technicals. This is partially offset by very weak earnings-based valuation (extreme P/E), while the earnings call adds support due to improving cash flow, cost actions and balance-sheet targets despite execution and timing risks.
Positive Factors
Cash generation
Sustained high adjusted free cash flow (~$13bn in 2025) and strong operating cash flow support durable funding for reinvestment, dividends and debt reduction. Reliable cash generation underpins balance-sheet repair and targeted capital allocation even if commodity cycles weaken.
Operational reliability & project execution
Consistently high availability (>96%) and strong project execution (seven major project start-ups in 2025) indicate durable operating capability. High reliability reduces downtime, improves margin sustainability, and supports the company’s ability to bring new production online on schedule.
Cost cuts and divestment progress
Delivering structural cost savings (~$2.8bn to date) and material divestments (>$11bn announced/completed) improves cash conversion and balance-sheet resilience. These durable actions expand financial flexibility and fund targeted upstream investments while reducing leverage risk over the medium term.
Negative Factors
Rising leverage
Leverage increased materially over recent years (debt-to-equity ~1.37), reducing financial flexibility. Higher debt levels constrain ability to absorb commodity shocks, limit capacity for discretionary investments or buybacks, and make achievement of net-debt targets reliant on continued cash generation and asset sales.
Weak profitability & volatile revenue
Revenue swings and a deterioration in net margins to near break-even indicate fragile bottom-line conversion. Even with positive EBITDA trends, weak net profitability increases sensitivity to cost or price shocks and undermines sustainable earnings power until margins recover reliably.
Reliance on divestment timing & impairments
A $4bn impairment charge and dependence on the remaining divestment timetable (including Castrol proceeds) create execution and timing risk. Meeting 2027 net-debt targets and restoring shareholder returns hinge on successful, timely disposals and avoiding further portfolio write-downs.
BP p.l.c. (BP) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£74.98B
Dividend Yield5.73%
Average Volume (3M)26.71M
Price to Earnings (P/E)1837.1
Beta (1Y)1.06
Revenue Growth-6.90%
EPS Growth-43.82%
CountryUK
Employees100,500
SectorEnergy
Sector Strength52
IndustryOil & Gas Integrated
Share Statistics
EPS (TTM)0.07
Shares Outstanding15,700,470,000
10 Day Avg. Volume25,231,935
30 Day Avg. Volume26,714,907
Financial Highlights & Ratios
PEG Ratio-19.42
Price to Book (P/B)1.71
Price to Sales (P/S)0.48
P/FCF Ratio8.05
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£482.92Price Target Upside-1.01% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)0.44
Revenue Forecast (FY)£175.70B
BP p.l.c. Business Overview & Revenue Model
Company DescriptionBP p.l.c. engages in the energy business worldwide. It operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power, and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture and storage. The company is also involved in the convenience and mobility business, which manages the sale of fuels to retail customers, convenience products, aviation fuels, and Castrol lubricants; and refining and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas; and invests in upstream, downstream, and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation, and power and storage areas. The company was founded in 1908 and is headquartered in London, the United Kingdom.
How the Company Makes MoneyBP generates revenue primarily through the exploration, extraction, and sale of oil and natural gas. The company earns money by selling crude oil and natural gas to refineries and other customers, as well as through its refining operations, where it processes crude oil into various petroleum products. Additionally, BP has a significant retail segment that sells fuels and convenience store products to consumers through its global network of service stations. The company also invests in renewable energy projects, which contribute to its earnings as global demand for green energy increases. Key revenue streams include upstream activities (exploration and production), downstream operations (refining and marketing), and renewable energy investments. BP's strategic partnerships and joint ventures with other energy companies also enhance its capabilities and market reach, contributing to its overall profitability.
BP p.l.c. Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call presented a broadly positive operational and financial update: strong project execution, record reliability (>96%), significant emissions and methane reductions, a 55% price-adjusted increase in adjusted free cash flow, improved ROACE (14% vs 12%), material cost reductions delivered ($2.8B to date) and clear progress on divestments and balance-sheet strengthening. Headwinds and risks were acknowledged: four workplace fatalities, ~$4B of impairments tied to transition businesses, net debt still above the 2027 target range, suspension of buybacks (reducing near-term shareholder returns), and timing dependence on remaining divestment proceeds. Overall, positive operational and cash-generation momentum appears to outweigh the challenges, though execution on remaining divestments, safety and continued cost discipline will be critical to sustain the positive outlook.Q4-2025 Updates
Positive Updates
Strong Adjusted Free Cash Flow Growth
Generated around $13.0 billion of adjusted free cash flow in 2025 (reported and price-adjusted) representing ~55% growth year-on-year on a price-adjusted basis versus 2024; operating cash flow for the year was $24.5 billion.
Improved Profitability
Underlying replacement cost profit (net income) of $7.5 billion in 2025 despite a weaker price environment; return on average capital employed increased to ~14% (price-adjusted) from ~12% in 2024 with a >16% target for 2027.
Operational Reliability Records
Set new records with upstream plant reliability and refinery availability both above 96% for the year; wells reliability nearly 98%.
Project Execution and Production Momentum
Started up 7 major projects in 2025 (5 were ahead of schedule); have started ~150,000 boe/d of the 250,000 boe/d net peak production expected by 2027; 6 more projects sanctioned and 3 more major projects expected online by end-2027.
Reserve Replacement and Exploration Success
Organic reserves replacement ratio increased to 90% in 2025 (up from ~50% average over the prior 2 years) with a 100% reserve replacement target by end-2027; 12 exploration discoveries in 2025 including significant finds in the Gulf of America, Namibia and Brazil (Bumerangue).
Major Discovery — Bumerangue (Brazil)
Initial in-situ analysis indicates ~8 billion barrels of liquids in place (roughly 50% oil / 50% condensate) for the Bumerangue discovery; appraisal program and design concepts are underway (wide uncertainty remains).
Emissions and Methane Intensity Reductions
Operational emissions (provisional) were 37% lower than 2019 levels (well ahead of the 20% target); methane intensity fell to 0.04% (vs 0.2% target for 2025).
Material Cost Reductions and Efficiency Gains
Delivered $2.8 billion of structural cost reductions to date (including ~$2.0 billion in 2025); increased structural cost reduction target to $5.5–6.5 billion by 2027 (includes expected impact of Castrol transaction); underlying operating expenditure down by >$700 million since 2023 and expected to reduce to ~$19–20 billion by 2027.
Balance Sheet Progress and Divestment Delivery
Net debt reduced to $22.2 billion at end-2025 (down $0.8 billion vs end-2024); $11.0+ billion of the $20 billion divestment program completed or announced in the year and $5.3 billion of divestment proceeds received in 2025; visibility to remaining proceeds (including ~$6.0 billion expected from Castrol).
Supply, Trading & Shipping Competitive Advantage
Supply, trading and shipping delivered an average ~4% uplift to BP's returns, a consistent contribution over the past six years, reinforcing integrated trading advantages.
Negative Updates
Fatalities in U.S. Retail
Four colleagues lost their lives in 2025 while working in the U.S. retail business (two incidents involved roadside assistance struck by passing vehicles); BP has permanently stopped roadside assistance next to active traffic lanes.
Q4 Impairments and Transition Write-downs
Recognized impairments of ~ $4.0 billion after tax in Q4, largely related to transition businesses (biogas and renewables), reflecting a decision to slow growth and high-grade the portfolio; management acknowledged this reflects prior capital outlay and tighter capital allocation discipline going forward.
Reported Upstream Production Lower
Reported upstream production was lower than in 2024 due to portfolio changes, although underlying production was broadly flat and exceeded prior annual guidance.
Net Debt Still Above Target Range
Net debt of $22.2 billion remains above management's 2027 target range of $14–18 billion, requiring further divestments, cash generation and balance sheet actions to reach the goal.
Suspension of Share Buybacks
Board suspended the share buyback program and will allocate excess cash to strengthen the balance sheet; this reduces a near-term return mechanism for shareholders despite preserved 4%+ dividend growth guidance.
Ongoing Process Safety and Regional Cost Gaps
Although Tier 1 and Tier 2 events fell by ~33% vs prior year, process safety events remain a focus; some operated regions and group functions are not yet top-quartile on cost and require further action to reach targets.
Working Capital and Settlement Cash Outflows
Adjusted working capital build of $2.9 billion in 2025 and a $1.2 billion payment toward the Gulf of America settlement liability in 2025; Gulf of America gross payments expected ~$1.6 billion in 2026 and ~$1.2 billion in 2027, with a net liability expected around $4.0 billion in 2027.
Divestment Cash Timing and Reliance on Castrol Proceeds
Of the $20 billion divestment program, ~$11+ billion announced/completed but only $5.3 billion received in 2025; remaining proceeds are dependent on further transactions (including ~$6.0 billion expected from Castrol) with the bulk of 2026 proceeds expected in H2—timing risk remains.
Company Guidance
BP's guidance focused on accelerating a disciplined turnaround: net debt was $22.2bn at end‑2025 (down $0.8bn y/y) with a target of $14–18bn by end‑2027, supported by $11bn of the $20bn divestment program completed/announced (received $5.3bn in 2025, expect $3–4bn in 2026, H2‑weighted); adjusted free cash flow was ~ $13bn in 2025 (≈+55% price‑adjusted; targeting >20% CAGR to 2027), operating cash flow $24.5bn (OCF + divestments $30.4bn), adjusted replacement‑cost profit $7.5bn, ROACE ~14% (price‑adjusted; target >16% by 2027), CapEx tightened to $13–13.5bn for 2026 (2025 CapEx $14.5bn, organic $13.6bn), shareholder distributions ≈30% of 2025 OCF with DPS $0.0832 and at least 4% p.a. growth (buybacks suspended to prioritise balance‑sheet repair), impairments of ~ $4bn after tax in Q4, financial obligations ≈ $58bn (incl. Gulf of America gross payments $1.6bn in 2026, $1.2bn in 2027), structural cost reductions $2.8bn delivered to date (≈$2bn in 2025) toward an increased $5.5–6.5bn 2027 target and underlying opex down >$700m since 2023 (targeting ~$19–20bn by 2027); operating guidance/highlights include 2026 production (ex‑divestments) ~2.3m boe/d (broadly flat vs 2025), 7 major project start‑ups in 2025 (≈150k of 250k boe/d net peak expected by 2027 now online), 2025 reserves replacement ratio 90% (aiming 100% by end‑2027), plant and refinery availability >96%, well reliability ~98%, methane intensity ~0.04% (target 0.2%), and operational emissions down 37% vs 2019.BP p.l.c. Financial Statement Overview
Summary
Financials are adequate but mixed: cash generation is solid (Cash Flow score 62) and free cash flow remained positive, but profitability has weakened materially versus 2023 (Income Statement score 56) and leverage has risen with debt-to-equity ~1.37 in 2025 (Balance Sheet score 52), reducing flexibility if the cycle softens.Income Statement
Revenue has been volatile, with declines in 2023–2024 followed by a modest rebound in 2025. Profitability has deteriorated sharply versus 2023: net profit margin fell from healthy levels to near break-even in 2024–2025, despite still-positive operating profitability (EBITDA margin improved in 2025 vs. 2024). Overall, the business shows cyclical earnings power but with materially weaker bottom-line conversion recently.56
Neutral
Balance Sheet
Leverage has increased over the last two years: debt-to-equity moved from below 1.0 (2022–2023) to above 1.2 in 2024 and ~1.37 in 2025, alongside a decline in equity. While the asset base is large and relatively stable, the higher leverage reduces flexibility and raises risk if the earnings backdrop remains soft.52
Neutral
Cash Flow
Cash generation remains solid: operating cash flow stayed strong across 2024–2025 and free cash flow remained positive, with growth improving in 2025 after a dip in 2024. However, the relationship between cash flow and reported earnings is not especially strong in the latest period (free cash flow is well below net income in ratio terms provided), suggesting earnings quality/working-capital timing and/or higher capital intensity is a watch item.62
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 189.34B | 185.23B | 213.67B | 240.86B | 154.71B |
| Gross Profit | 33.53B | 28.11B | 47.39B | 54.05B | 21.65B |
| EBITDA | 31.07B | 25.11B | 42.89B | 29.37B | 27.82B |
| Net Income | 55.00M | 382.83M | 15.50B | -2.48B | 7.42B |
Balance Sheet | |||||
| Total Assets | 278.53B | 282.23B | 280.29B | 288.12B | 287.27B |
| Cash, Cash Equivalents and Short-Term Investments | 36.71B | 34.52B | 28.59B | 29.77B | 30.96B |
| Total Debt | 72.53B | 71.55B | 63.08B | 55.49B | 69.79B |
| Total Liabilities | 204.53B | 203.91B | 194.80B | 205.13B | 196.83B |
| Stockholders Equity | 53.05B | 59.25B | 70.28B | 67.55B | 75.46B |
Cash Flow | |||||
| Free Cash Flow | 11.27B | 12.00B | 17.75B | 28.86B | 12.72B |
| Operating Cash Flow | 24.49B | 27.30B | 32.04B | 40.93B | 23.61B |
| Investing Cash Flow | -11.50B | -13.25B | -14.87B | -13.71B | -5.69B |
| Financing Cash Flow | -15.88B | -7.30B | -13.36B | -28.02B | -18.08B |
BP p.l.c. Technical Analysis
Positive
487.85
Price Trends
445.39
Positive
440.41
Positive
413.95
Positive
Market Momentum
8.92
Negative
63.73
Neutral
66.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:BP, the sentiment is Positive. The current price of 487.85 is above the 20-day moving average (MA) of 466.65, above the 50-day MA of 445.39, and above the 200-day MA of 413.95, indicating a bullish trend. The MACD of 8.92 indicates Negative momentum. The RSI at 63.73 is Neutral, neither overbought nor oversold. The STOCH value of 66.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:BP.
BP p.l.c. Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | £176.65B | 13.38 | 8.25% | 4.00% | -9.21% | -2.61% | |
73 Outperform | £1.66B | 10.11 | 17.24% | 10.99% | -2.66% | 0.11% | |
70 Outperform | £2.58B | 20.43 | 12.03% | 5.64% | 159.13% | 143.76% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
63 Neutral | £4.95B | -11.95 | -11.32% | 8.77% | 123.03% | -330.89% | |
60 Neutral | £74.98B | 1,837.12 | 2.40% | 5.73% | -6.90% | -43.82% | |
54 Neutral | £3.87B | -44.07 | -4.67% | 14.05% | 63.10% | -161.03% |
* Energy Sector Average
GB:BP
BP p.l.c.
487.85
102.59
26.63%
GB:HBR
Harbour Energy
271.60
80.62
42.21%
GB:SHEL
Shell (UK)
3,132.00
663.06
26.86%
GB:SEPL
SEPLAT Petroleum Development
429.50
248.50
137.29%
GB:ENOG
Energean
903.00
23.48
2.67%
GB:ITH
Ithaca Energy PLC
234.00
115.16
96.91%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.